D-Lab
Development
2009.11.02
Iqbal Quadir | Grameen Phone Founder
GET NOTES from JESSICA
Teaching Class at Harvard
General thinking of peoplel:
Poor people lack resources, then people give money to
the gov’t, and the gov’t makes things for them. And
that will create progress.
At the end of the day, the history of progress,
is the dispersion of power.
- Concentrated power causes problem.
- Giving aid to central gov’t is a corruption
creating approach
- Try to do the same thing to innovation
(dispersion of power).
Historical example of property rights in England
King not being able to tax people,
and the development of Parliament.
Because there needed to be a democratic gov’t.
Compromises king had to make, created checks
and balances, to the point where Parliament was the
ruler. Compromises need to be made when there is a
shortage of power. The more dispersed, the more
economic value for common means, the greater the
public good.
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Private Sector Leading
International Development
Gov’t main point is governing. When it gets into other business, it
distracts itself.
The question is not “what is the role of gov’t”
but “how do we get good gov’t”
How do you make sure you have a good gov’t?
If the gov’t owns the economy, then that is not a good gov’t.
There can’t be too much power, that no one can challenge the
mistakes, or wrong doing of the gov’t. You need newspapers, media,
businesses. Create jobs and opportunities in many places. Need
many companies to have good gov’t.
IE one gov’t, and one company, would be bad
“Dispersion of power through
innovation and enterprise.”
Explain china government?
Read a book by Prof. Huang of sloan school
EXAMPLE: after 76 when Mao died, many villagers took advantage
of the power vaccum. Defying the rule of communist rule.
The next gov’t validated that (written in book by jefferey
sachs). One of the reasons did well, is that 90% of population
was employed in the villages. Many other things happened. China
gov’t expected, that they would get Oil money, and farm certain
projects, but they never found oil. So then in 1982, they opened
up certain export regulations. The agricultural development
before, gave rise to entrepreneurship. When gov’t intervened,
gave rise to many problems.
On Aid Distribution...
Limitations to model?
See the broader picture… If my neighbor is doing
better, that alone might be good for me. It will be too
much for any particular model to solve all problems. We
should leave some problems for you to solve, there are
lots of things to do.
ON NGOs role...
Economic vitality comes from capitalism, from profits.
NGOs are better than giving money to the gov’t. The
gov’t belongs to all citizens. If I corrupt the gov’t,
then I hurt everyone. If an NGO goes out of business,
I don’t hurt anyone. A business is not doing well, it goes
down the drain. It is a dispersion of power. Lots of
NGOs trying lots of different things. Compete with
each other to get funding. If one NGO goes down, the
world is not as worse off is gov’t goes down.
Even better, if you are innovative enough, if you are
innovative, you create value.
For Profit can grow organically, can lead to economic
vitality. An NGO has to find more funding, can’t grow
organically. NGO still better to fund than to fund a
gov’t.
Imagine if we had funded the British Monarch
from outside, that might have hurt England. What
if the Pope had provided soldiers, and put down
democracy?
“Capitalism gives rise to democracy.”
{radical idea, you may not accept}
They come about because no one succeeds in preventing them.
Example of the monarch of England, when entrepreneurs from
below start to make things happen. It will lead to democracy in
China.
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Non-profit? Drawing line of
making profit out of poor?
Can be hazard, when there is a non-competative situation. Only
one person selling aspirin, and selling for high price of extortion.
Can happen, when a person is in monopoly with government.
1. Means there is corruption in gov’t, big problem
2. If I am making too much profit, means someone else will
find a way to get into business, to make a profit for themselves.
A self correcting device. Profit is then a good thing (as it allows
for self correction).
Competition, and opportunities, can arise from desire to make
profits. Hiring brothers, getting wages, higher wages when
competition comes in .
We are educating young people that profits are bad for
poor countries. That gov’t don’t work, have an NGO (a non
government). Solve problems in this country through profit, and in
poor countries through gov’t.
Intellectual Property
I don’t know what is really necessary. Fundamental problem, dealing with country where people don’t have any rights, not even property rights. And we are thinking about IP rights. There are other problems, that people already have. There are real problems of property rights, from bad governments of those countries, from aid to these countries.
Digital properties in western countries, then Microsoft wants to sell software… etc. Thinking of our own vested interest. We have started to think of IP rights before more basic rights have been addressed.
England used to have ideas, and America stole when developing. When America developed enough, then in our own interest, we pushed to protect IP. Has to be
underground demand for protection of rights. Another reason for bottom of development. That is why there is piracy in developing country, desire is not there, because there is coming a one way IP.
When is it good to start a business in a place…
On Business
Better to have someone creating a business, than no one at
all. Even better, if the local people are. If they can’t, then a
foreigner creates one, and local guy learns something, then that
is alright.
At the end of the day, our set thinking of what is good. We don’t
need all that thinking. The human brains are the most valuable
thing. Poor countries have plenty of brains, just not being allowed.
We think we need to give them resources.
Poor countries are wasteful… they have time, so that’s a thing
to waste. Wasting children because they don’t have electricity.
Have to utilize the things we do have. Haven’t been able to,
because we’ve been blocking them, and given others the ability to
block them. (HOW is this happening)
We are under the economic burden of thinking we need
a large opportunity cost, because of our MIT education. If you free yourself from that, and think of what you are content with. Then once you have designed something, and are content with it, can re-evaluate it. If it is adding value to lives, then you have done something useful. Depending on your contentment, better to start small, easier to manage.
Scales of Capital
AS long as you are CREATING VALUE then I am not so
concerned with scale.
If you make one cow produce twice as much milk, then
you why can’t you take that to other villages? Why is
everyone so concerned with scale and large amounts of
money?
I just don’t think scale matters.
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MIT OpenCourseWare
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EC.701J / 11.025J / 11.472J D-Lab I: Development
Fall 2009
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